India received the highest annual Foreign direct investment (FDI) inflows of almost $85 billion in FY 21-22. India is rapidly emerging as a preferred country for FDI in the manufacturing sector. FDI Equity inflow in Manufacturing Sectors have increased by 76% in FY 2021-22 ($ 21.34 billion) compared to previous FY 2020-21.
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What is FDI:
Foreign direct investment (FDI) is an investment made by a company or an individual in one country into business interests located in another country. FDI is an important driver of economic growth.
India’s Position In the World:
As per the UNCTAD World Investment Report (WIR) 2022, in its analysis of the global trends in FDI inflows, India has moved to 7th rank among the top 20 host economies for 2021. Even in this hard time, this is a good signal that the economy is doing very well and resilient from the global disturbances.
Highest FDI Contributors Country-wise:
Singapore (27.01%) > USA (17.94%) > Mauritius (15.98%) > Netherland (7.86%) > Switzerland (7.31%)
Top 5 States receiving the highest FDI Equity Inflow during FY 2021-22 :
- Karnataka (37.55%),
- Maharashtra (26.26%),
- Delhi (13.93%),
- Tamil Nadu (5.10%) and
- Haryana (4.76%)
Top 5 sectors receiving the highest FDI Equity Inflow during FY 2021-22 :
Computer Software & Hardware (24.60%), Services Sector (Fin., Banking, Insurance, Non Fin/Business, Outsourcing, R&D, Courier, Tech. Testing and Analysis, Other) (12.13%), Automobile Industry (11.89%), Trading 7.72% and Construction (Infrastructure) Activities (5.52%).
Difference Between Gross And Net FDI :
It is to be noted that, there is a difference between Gross FDI and Net FDI. The FDI investors in India earn profit which they can take back to their home country or they can sell the investment as well in India and return to their home country. When this is subtracted from Gross FDI then we get Net FDI. Somewhere Gross FDI data is used and somewhere Net is used. In 2021-22, Net FDI was around $55 billion.
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